US Auto Names Poised for China Gains: Analyst

A few American auto companies show strength in China despite political friction, Citigroup analyst Itay Michaeli said Wednesday on CNBC.

On “Fast Money,” he did not think there would be much pricing fallout from a U.S. House of Representatives Intelligence Committee report that Chinese telecom companies Huawei Technologies and ZTE should be viewed with “suspicion.”

“There could be some short-term impact, but at least initially this doesn’t seem like the same opportunity that existed last year with the Japan tragedy, where there was a six-month period of market share gains and favorable pricing, just given the different dynamics that we have out there in the China market,” he said.

Locally manufactured automobiles, as well as research and development, were part of the reason, Michaeli said.

“A lot of these vehicles are now built in China for China,” he added. “You know, GM has been in China since the late 1990s. Ford is building a lot of capacity in China, so these are investments in the China economy.”

Responding to a question about Delphi , Michaeli said that the stock still appeared attractive.

“It’s still one of the few secular-growth auto stocks that trade with a significant discount,” he said. “They’re shareholder friendly. Their numbers have been terrific since the IPO, and we think estimates next years could actually go up.

“Our top pick is American Axle. We’re very bullish on the pickup truck segment. I think in the next 12 months, you’re going to hear a lot about the significant pent-up demand in U.S. full-size pickup trucks.”

Trader disclosure: On Oct. 10, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s “Fast Money” were owned by the “Fast Money” traders: Tim Seymour is long AAPL; Tim Seymour is long BAC; Tim Seymour is long SBUX; Tim Seymour is long GM; Guy Adami is long C; Guy Adami is long GS; Guy Adami is long INTC; Guy Adami is long AGU; Guy Adami is long MSFT; Guy Adami is long NUE; Guy Adami is long BTU; Steve Grasso is long AET; Steve Grasso is long ASTM; Steve Grasso is long AUO; Steve Grasso is long BA; Steve Grasso is long F; Steve Grasso is long LF; Steve Grasso is long LNG; Steve Grasso is long MHY; Steve Grasso is long P; Steve Grasso is long NVIV; Steve Grasso is long PFE; Steve Grasso is long S; Steve Grasso is long WYNN; Scott Nations is long SPY; Scott Nations is long BAC; Scott Nations is long C; Scott Nations is long JPM; Scott Nations is long VIX.

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